Foxconn Technology Group, the largest contract manufacturer for Apple (AAPL), is doubling down on its investment in Lordstown Motors, a money-losing electric carmaker based in Ohio.
The Taiwan-based assembler of iPhone, iPad and Mac computers announced Nov. 7 it will invest up to $170 million in exchange for about 18 percent of Lordstown’s outstanding equity. The deal will make Foxconn the largest shareholder of the EV startup, despite having little experience or expertise in automobile manufacturing.
The news sent Lordstown shares up 23 percent in yesterday’s after-hour trading. But the stock fell back to its previous levels today (Nov. 8) after the company reported widening quarterly losses.
Foxconn already owns Lordstown’s only factory, a former General Motors plant, in Lordstown, Ohio. Lordstown sold the 6.2 million-square-foot facility to Foxconn in September 2021 for $230 million to fund the production of its first electric pickup truck, Endurance.
Since that transaction, “it has been our objective to develop a broad strategic partnership that leverages the capabilities of both companies,” Daniel Ninivaggi, Lordstown’s executive chairman, said in a statement. “Foxconn’s latest investment is another step in that direction.”
Foxconn and Lordstown said they would jointly develop a new electric vehicle, but didn’t share further details.
Foxconn mulls EV projects amid iPhone production chaos
Foxconn, a major manufacturer for the world’s largest consumer electronics makers, aims to be an EV manufacturer of similar scale. At a corporate event last month, Foxconn chairman Liu Young-way said he hopes the company will one day make cars for Tesla as it ramps up its EV manufacturing operation.
Tesla already has a robust manufacturing network around the world so investing in less-established startups like Lordstown is a potential entry to EVs for Foxconn. However, the deal came at a challenging time for both companies. While Lordstown continues to struggle with losses, Foxconn is wrestling with an unexpected production chaos at its largest iPhone factory.
Last week, a Covid outbreak was reported at a Foxconn’s factory in Zhenzhou, a city in central China. Fearing strict lockdowns, thousands of Foxconn workers fled the factory overnight, leaving its assembly lines severely short staffed. Despite Foxconn’s efforts to call workers back with attractive bonuses, the factory is still operating at significantly reduced capacity, prompting Apple to issue a warning over the weekend that buyers of iPhone 14 or iPhone 14 Pro might need to wait longer due to the production disruption.
Lordstown today reported a net loss of $154 million with no revenue for the three months ended September. The loss widened by more than 60 percent from the same period last year. About 20 percent of the loss stemmed from historical litigation, which includes a series of government-led investigations in 2020 over its pre-order disclosures.
Lordstown was founded in 2019 by entrepreneur Steve Burns out of an abandoned GM plant that used to produce the Chevrolet Cruze. With its Endurance pickup truck, Lordstown aims to gain a first-mover advantage in the burgeoning electric truck sector although rival electric truck makers, including Rivian and Ford, have already begun delivering to customers. In today’s earnings release, Lordstown confirmed its plan to begin delivering Endurance before the end of this year.